Monetary Policy & Inflation | Rates
Paul Volcker, who was a chairman of the Fed in the ‘80s, as a believer in inflation control and under his watch fed rates rose to 22% in 1981 where they peaked. His strategy for low inflation worked, and has since remained the principle monetary policy tool: they have maintained an average inflation of 1.5% since 2010. Robert Barro, a Professor at Harvard, however, presents a curious puzzle in monetary policy impact today. Recent research demonstrates that Fed rate changes and QE see only a small and delayed response by inflation and yields…
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